Secretary-General

Transport for Growth

Plenary Keynote Speech by Angel Gurría, OECD Secretary-General

Leipzig, 3 May 2012

Ministers, Ladies and Gentlemen:

It is a great to be in beautiful Leipzig, for the 2012 edition of the International Transport Forum. International dialogue and cooperation is crucial, particularly in times of crisis; it is especially so in transport, the circulatory system of our economies.

This Forum is taking place in a context of prolonged uncertainty. According to the OECD’s last Interim Economic Assessment, while we just moved away from the cliff’s edge, the recovery remains deeply fragile. Growth is strengthening in North America and Japan, but in Europe it is still weak. Unemployment remains high and growing in many countries and the threat from sovereign debts persists in the Euro area. World trade growth remains muted and emerging markets are also showing signs of slowdown. Protectionism threatens and inequality keeps rising.

Our countries need to do more to boost recovery and achieve long term sustainable growth. With very little space left for fiscal and monetary policy, our main recommendations have been to “Go Structural”, to “Go Social” and to “Go Green”. Recent OECD studies show how structural reforms and policies can deliver short term economic and social benefits while at the same time laying the foundations for long term sustainable growth. One particular sector where structural reforms, innovation and smart technologies can have a decisive impact on growth and employment is the transport sector.

The transport sector challenges: Going Seamless!

The transport sector needs a rapid and radical transformation. Our Transport Outlook 2012 (which I will be presenting later today) shows how the demand for transport is going to increase considerably in the coming years: by 2050, global passenger transport volumes could be 2 to 2.5 times as large as they are now, a figure that could rise up to 3.5 times in non-OECD countries. Freight transport volumes could rise by a factor of 3 or more on the global level.

Transport activities are already a big source of C02 emissions, 23% come from combustion! And they are set to rise to 27% of total CO2 emissions by 2050. Our recent Environmental Outlook to 2050 projects that, without immediate action, by 2050 we will see a 50% increase in greenhouse gas emissions, with a disastrous impact on the living standards of people worldwide.

These prospects highlight the key challenges for the transport sector. How can we meet growing demand when funds are scarce and transport systems are already under strain? How can we ensure mobility and provide the needed infrastructure to a growing and increasingly urbanized population without further endangering our planet? How can we make sure that our decisions today will not lock in our infrastructure in a non-sustainable pattern?

The theme of our meeting today is timely: Adopting a “seamless transport” paradigm facilitates an integrated approach to dealing with these challenges.

Seamlessness is about better connecting people, markets and ideas.

It is about helping the flow of goods – like the new 12 000 km freight rail route linking Germany with China.

It is about better planning our cities so that land use patterns facilitate sustainable mobility.

Seamless transport is also about equity by providing our communities better access to job opportunities through high-quality multi-modal connections and door-to-door services.

For transport to promote a long term sustainable growth agenda, seamlessness is the way to go.

Seamless Transport Facilitates Trade

The most critical contribution of seamless transport to growth is through trade. Global value chains underscore the importance of transport services for which we must promote openness. But we need to be able to measure openness and identify what works and what does not work in terms of regulation. I am pleased that the recently launched OECD Service Trade Restrictiveness Index project will provide you with the needed tool to assess openness of transport services regimes.

Seamless supply chains would greatly benefit from removing obstacles at the borders. A 10% increase in global trade would be achieved if only we could improve customs and security procedures. This would represent an additional 400 billion dollars to global GDP.

Borders can kill trade. There are, however, effective customs services in the world. In Australia, for instance, 99.98% of cargo was released within 15 minutes of lodging electronic import documents last year. This is an example of excellence. But unfortunately, it is quite the opposite of the slow, outdated and frankly unprofessional procedures that persist at some of our borders and in many of our ports.

Quality infrastructure is another pillar for seamless supply chains. I know that our German hosts are vying with Singapore, Sweden and the Netherlands for the title of the world’s logistics champion. New figures on the performance of national logistics systems were presented here yesterday and hopefully all of our member countries will be competing to be on the top in that list.

Seamless Transport for Green Growth

Thinking seamless can also help to foster growth in a more sustainable, greener way.

Deep cuts to greenhouse gas emissions from transport will require reducing the carbon intensity of travel. This is partly a matter of changing the energy basis of transport away from oil, which implies increasing integration of transport and electricity systems. The IEA estimates that rapid development of electric vehicles could shave around 12% off transport CO2 emissions by 2050, although the biggest reductions will come from fuel economy improvements in conventional vehicles.

Technology is key to reducing emissions but technology alone will not do the job. We need to convince users to adopt less energy-intensive mobility habits. This means greening mobility but it often also means better mobility. For example, using buses and trains more often where currently cars are the default choice. Japan, Switzerland and the Netherlands are admired as models of integration of transport modes but there are many other successful examples all over the world, from Madrid’s intermodal exchange stations to Frankfurt airport’s rail/air services - that some of us used to get here.

Going beyond: what can public policy makers do?

In a period of budgetary pressures and austerity, Transport Ministers need to think even more creatively how to invest in the future. Let me share a few thoughts:

First, efforts to reform the regulatory environment in transport can already make a vital difference. We are seeing today the enormous opportunities from the introduction of direct competition on tracks for high speed train services in Italy.

Improving planning and coordination among levels of governments and across line ministries is also crucial for providing more effectively connected and seamless transport modes and facilitated private sector participation. Policy integration and coordination is a prerequisite for seamless transport and for putting transport on a green growth path.

Second, thinking seamless helps us make smart investment choices with large pay-offs at modest cost. One example is the smart Oyster card used on all of London’s public transport. The smart-card radically speeds up access and reduces crowding. It is now used for around 90% of journeys for the underground rail. Today, a new generation of contactless-payment bank cards offers travellers the prospect of using a single card to access transport in any city in the country. Smart-phones are also in the picture, already used to pay for bus and metro rides in Korea and Japan, Hong Kong and Singapore, as well as for the more usual airport check-in services.

Third, although successful implementation of smart-card and smart-phone payment systems is very much a private sector role, governments have the essential responsibility of brokering to take the revenue sharing agreements between transport companies that make smart cards interoperable. They can also make their use a condition for awarding public transport concessions.

Ladies and Gentlemen,
Thinking and acting seamless should be part of a new approach to our economic challenges.
More seamless transport is critical to driving growth, especially through trade, and helps identify smart investment opportunities for greener growth.

Seamless transport can improve the everyday lives of all our citizens, determining their access to jobs and education.

Making transport seamless is therefore a part of our core business at the OECD, of making “Better Transport Policies for Better Lives”. Have a wonderful, fruitful and “seamless” Forum!
Thank you.